Britons boost Tax-Free shopping in Europe

12-08-25

With VAT refunds no longer available in the UK, growing numbers of British consumers are turning away from domestic shops to take advantage of tax-free purchases on the Continent. The latest figures from the Association of International Retail (AIR) point to an exodus of shoppers who, tired of paying more at home, are opting to travel abroad to enjoy the fiscal perks.

Between 2021 and 2024, Britons’ spending on tax-free shopping in the EU has risen more than fivefold, reaching £742 million in 2024, up from just £147 million in 2021. The figure stood at £527 million in 2022 and £646 million in 2023, with momentum continuing this year: in the first 22 weeks of 2025 alone, spending has already grown by 16 per cent compared with the same period last year.

This shift overseas not only reflects a reaction to higher domestic costs, but is also reshaping the landscape of retail-driven tourism. France has emerged as the favoured destination, accounting for 35 per cent of Britons’ tax-free spending, with 75 per cent of that taking place in Paris.

Businesses of all sizes, from Burberry to Primark, have renewed their support for AIR’s call for the Government to reinstate VAT-free shopping for international visitors — a measure they view as essential to restoring the UK’s global competitiveness and revitalising the retail sector.

AIR chairman Derrick Hardman notes that this trend has opened up “a new market for tourism driven by shopping”, while lamenting that British consumers are taking their money to other economies. He stresses that all available evidence shows VAT refunds would be a highly cost-effective lever, benefiting not only retail but also related sectors such as hospitality, transport and dining.

Economic modelling suggests that reinstating VAT refunds could deliver an annual £3.65 billion boost to GDP, create over 73,000 jobs, and generate more than £500 million in additional tax receipts. At the same time, earlier reports warn that abolishing the scheme cost UK retailers between £640 million and £1.5 billion, particularly due to a fall in high-spending tourists in flagship shopping areas such as London’s West End.

From a governmental perspective, the official stance is that the UK remains one of the most visited countries in the world, and preparations are under way to launch a National Visitor Economy Strategy before the end of the year, with the aim of attracting 50 million international visitors annually by 2030. However, industry experts and traders insist that reintroducing VAT-free shopping would be a pivotal driver in achieving that goal.

Conclusion: The sharp increase in Britons’ tax-free spending in Europe is far from a trivial trend; it reflects a tangible economic shift towards more fiscally attractive destinations. In this context, restoring VAT refunds in the UK is increasingly seen as a strategic necessity for revitalising retail and reinforcing the nation’s status as a global shopping capital.

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